Forexpros – The euro dropped to a two-year low against the U.S. dollar on Monday, as sentiment on the single currency was hit by growing concerns that Spain will need a full bailout.
EUR/USD hit 1.2086 during late Asian trade, the pair’s lowest since mid-June 2010; the pair subsequently consolidated at 1.2088, shedding 0.55%.
The pair is likely to find support at 1.1956, the low of June 10 2010 and resistance at 1.2133, the session high.
Concerns over Spain’s finances mounted on Friday, after the state of Valencia requested financial aid from Madrid. In addition, Spain’s government cut growth forecasts for 2013 and said the economy would stay in recession next year.
The yield on Spanish 10-year bonds rose to a record 7.37% earlier Monday, above the critical 7% threshold widely considered unsustainable in the long run.
The euro fell to its lowest in 12 years against the yen, with EUR/JPY down 1.01% to 94.45 and was trading close to a three-and-a-half year low against the pound, with EUR/GBP down 0.19% to 0.7769.
Elsewhere, the single currency eased back from a record low against the Australian dollar, with EUR/AUD easing up 0.17% to 1.1736.
Neither the euro zone nor the U.S were to release any significant economic indicators on Monday, so markets looked set to remain focused on developments in Europe.
Forexpros
